An innovative and environmentally friendly paving technique is being tried on one of San Jose's most pothole-infested roads -- and cities across the Bay Area are watching to see if the same method could save them millions of dollars and allow them to repave dozens of other roads.

Monterey Road -- a busy, bumpy, crack-riddled street that has come to symbolize the sorry condition of roads across the region -- is being resurfaced with a process called "cold in-place recycling." It is one ray of hope for agencies facing huge funding shortfalls while needing to maintain a vast network of streets.

"This is pretty cool," said John Goodwin of the Metropolitan Transportation Commission, which recently invited 47 public works officials to view a pilot project in Napa. "It's more than a small glimmer of light."

Crews on Monterey Road are ripping out the current pavement, but that's where the old method ends. Instead of trucking the broken-up asphalt to landfills, a train of machinery chews it up four inches deep and recycles every pebble back onto the road.

The impact: More than 1,400 truck trips and about 10,000 tons of material will be saved. And the new road can be driven on almost immediately, even though the job isn't done yet. The final step is adding a two-inch layer of fresh asphalt made from 17,000 recycled tires.

Best yet, the tab: While this project would cost $3.1 million to pave the conventional way, it's $2.4 million this way - a 23 percent cut in cost.